The third meeting of the Financial Stability Council in 2017 was held on Monday 9 October at the Ministry of Finance and Economic Affairs.
Overall, the risk in the financial system is considered rather small. The real estate market is under strain, prices are reaching their highest point historically and a gap has begun to develop between real estate prices and their economic determinants. However, some evidence indicates that real estate prices are not rising as fast as they have been in recent terms. The tourism sector is still growing, but at a slower pace. Credit growth has been moderate but is picking up, and this is especially so for credit to businesses. The external position is likely to support stability in the coming years, despite a declining trade surplus. The private sector is still strong and its overall position has improved with the strengthening economy. The commercial banks are also highly resilient in terms of asset quality, capital, and liquidity.
Developments in cyclical systemic risk have been broadly as was expected at the last meeting of the Financial Stability Council. With reference to the analysis conducted by the Systemic Risk Committee, the Financial Stability Council recommends to the Financial Supervisory Authority that the countercyclical capital buffer be held unchanged at 1.25%; cf. the Council's recommendation of 30 September 2016. The Financial Stability Council can therefore be expected to recommend that the build-up of the countercyclical capital buffer continue in line with the accumulation of imbalances in the financial system.
The Financial Stability Council's next meeting is scheduled on 19 December 2017.